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Turnkey Property Investments: The Ins and Outs

Turnkey Property Investments: The Ins and Outs

If you’ve ever performed a Google keyword search for ‘property management,’ there’s a great likelihood you’ve seen turnkey property management options appear in the results. And, if you’ve read even a little bit of the descriptions or clicked through to one of these websites, there’s also a good likelihood the offering sounds a bit tempting.

So, let us take a moment to address the topic and provide a little bit of insight and context for turnkey multifamily property investing.

What is it?

A turnkey real estate investor is a professional who specializes in a particular market. They know the area well and have purchased up several or many properties in that area. Having such an arsenal allows them options for individual investors to choose from, based on their own unique requirements or parameters.

What is often most appealing, is that the majority of turnkey providers already have renters in place and paying rent, and they provide a guarantee that those tenants will stay in place, generating revenue, for a given period of time. Some of these companies serve as the property management provider onsite as well, but many outsource the responsibility to third-party providers.

Benefits of Choosing this Path

Of those considering turnkey investments, there are two benefits most often noted by multifamily property investors:

  1. It’s a very hands-off approach to investing. While hiring a property management company in any capacity can provide the benefit of less-work and day-to-day responsibility, turnkey takes this a step further by making the entire investing process less work as well.
  2. As previously mentioned, the option for rental assurance with some providers is a great consideration. After all, who doesn’t want at least a period of time where rental income is a sure thing?

The Ole Wool Over the Eyes…

If it sounds too good to be true…well, you know. Despite the attractive benefits, there are reasons to be wary.

  • Research is still a must. Remember that even though the majority of work is done for you, every savvy investor knows how important due diligence is during the investment stage. Know who you are dealing with before you ever sign anything or turn over a payment.
  • Consider the cost. To get all the benefits of a turnkey investment, the outlay will be more considerable. The provider is essentially finding the investment, making the recommendations, doing all the legwork, managing the property and tenants, and turning over the revenue. There’s a good likelihood that revenue will be less than what you might get with a solid independent investment and your own choice of professional property management company.
  • Assurance is limited. The amount of time a turnkey provider is going to assure rental income is limited, usually to one year. What then? How much control will you have over the churn and income potential?

Stay in Control

If you want to really experience the benefit of property ownership with the help of a property manager, then the traditional management company is the way to go.  A professional property management company will assist you in getting the most from your investment, and many will even serve as a guide through the investment process. As a perk, you get to stay involved in the process as much or as little as you want.

While turnkey investing has its merits, it also has a very specific place, which may not be appropriate for every investor. The key is to make sure that regardless of the direction you are leaning, you always perform your due diligence before deciding to entrust your valuable assets.

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